Estonia plans fresh fiscal measures to keep on euro track

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Estonia plans fresh fiscal measures to keep on euro track

Postby theeuro on 06 May 2009, 15:30

Agence France-Presse

Estonia plans fresh fiscal measures to keep on euro track

05 May 2009, 23:07 CET

(TALLINN) - Recession-hit Estonia plans fresh spending cuts aimed at keeping the 2009 budget deficit below 3.0 percent of GDP in order to join the eurozone in January 2011, the finance ministry said Tuesday.

"The government has decided to cut the 2009 budget by at least 5.5 billion kroons (352 million euros, 472 million dollars)," Kristi Joesaar, a spokeswoman for Estonia's finance ministry, told AFP.

Joesaar said additional savings of 2.6 billion kroons were also planned through freezing state payments to pension funds and increases in unemployment security tax.

The Estonian parliament adopted a first round of budget cuts in February.

The fresh cuts are intended to keep the 2009 budget deficit below three percent, allowing Estonia to fulfill a key Maastricht Treaty rule to make good on its goal of joining the eurozone in January 2011, Joesaar said.

Estonian Prime Minister Andrus Ansip on Tuesday discounted an EU forecast released Monday predicting Estonia's deficit - currently below three percent - may jump to 3.9 percent in 2010.

"The EU report is not taking into account changes that Estonia plans to implement in order to keep the budget more balanced. Those changes will keep the budget deficit from exceeding 3.0 percent next year too," Ansip said told Estonian public radio.

Ansip's centre-right government is also considering selling off state property worth up to a billion kroons to boost revenues.
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